Gunns 'had' solvency concerns

Date: February 27 2013

Paddy Manning

THE directors of failed Tasmanian export woodchipper Gunns should be investigated for potential breaches, including insolvent trading and misuse of third-party monies to fund the company's operations, say administrators PPB Advisory in a report to creditors.

In a detailed report to creditors, PPB Advisory says Gunns directors may have misused harvest proceeds owing to the ''growers'' investors in its managed investment schemes, worth up to $11.2 million, as well as $27.6 million in sale proceeds from its Green Triangle estate, and another $1.2 million in grower premiums owed to insurer Agricola.

Gunns may have had solvency concerns six months before it entered administration on September 25 last year.

''As we are yet to form a conclusive view on the date of insolvency we are unable to state definitively whether the Gunns Group traded whilst insolvent,'' the report said.

''Additional investigations will be required by a liquidator (if appointed) before a view may be formed.''

The administrators' ''preliminary view'' is that Gunns was insolvent from ''at least'' September 21. But the report says solvency concerns could have existed when prospective partner in the company's proposed northern Tasmanian pulp mill, the Chandler Corporation, pulled out in March 2012.

PPB says there were also concerns in July, when Gunns announced it was relying on the support of lenders, and September 12, when lenders knocked back a request for funding.

The report concludes Gunns has debts of about $3 billion and recommends the company be liquidated.

It says lenders owed $446 million are unlikely to be paid in full and unsecured creditors owed $2.4 billion will not see any return.

Workers' entitlements totalling $10 million will be met, the report says. A second meeting of creditors in Launceston next Tuesday will determine whether the company should be wound up.

With AAP

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